Collateral Optimisation Trends

with Anne Taieb, WeMatch

Anne Taieb, Wematch’s head of product, securities financing, recently explained to Securities Finance Times how the WeMatch platform has established industrial scale for synthetics, but can be easily adapted to other areas of securities finance with the objective of offering cross-asset synergies between synthetic and physical products

What trends have you seen in collateral optimisation and what has been the main driver of your product?

As an ex-delta one trader, balance sheet costs and collateral costs were a key factor in my trading decisions. As head of product at Wematch, it is exciting now to be helping our clients to manage the optimisation of their books and to bring greater effectiveness to the marketplace. Over the past few years, the market trend has been all about spread compression and the true cost of doing business. The cost of the balance sheet and the various forms of capital requirements — for example risk-weighted assets (RWA), net stable funding ratio (NSFR) and liquidity coverage ratio (LCR) — are now such a huge component of any trading decision. Therefore, as a dominant trend, we have seen banks building out new algorithms and taking steps to trade as effectively as possible.

With more than US$1 trillion of collateral optimised in our platform in 2021, collateral optimisation on synthetic books (total return swaps, TRS) has seen a very significant increase in terms of demand and product sophistication. Our current clients have been contributing to building a complete product, where users can now select rules within a very rich library, allowing them to enjoy a fully customisable experience. Collaboration is one of our key values as a firm and this is true for my product team. We listen to our customers’ requirements and strategically innovate to ensure our technology benefits the entire community. This has encouraged the adoption of market standards in an opaque marketplace, ensuring the market wants to use Wematch for liquidity and lifecycle management.

A second major trend we have identified is around connectivity. Our web-API is now being rolled out to most of our clients, who then benefit from low-touch workflows and optimal time management, focusing on the optimisation rules and adjusting the outputs depending on their daily needs.

Read full article at Securities Finance Times